When I was young, that advice daunted me. I wasn't interesting - I hadn't had enough life experience yet to write something resonant. Now, I'm writing about my youth and wishing I'd kept better notes. What I've grown to understand is that the phrase really wants me to embrace my observations and experiences in life. It's as simple as remembering someone I knew... it preserves a creative part of you: the storyteller... and it's more likely to resonate with an audience. What writer doesn't want that? In the spirit of 'show, don't tell,' here's a brief example:
As June kicks off (my favorite month of the year for various reasons), I recommit annually to honoring the memory of my maternal grandfather, Jerry, through my stories. Today is - or, was, rather - his birthday. He was a hard-working man who knew struggle, both physical and emotional, but he also set a strong example, and left snickers in the wake of his mischief-making. I hold space for him in my creative work by finding different ways to sprinkle his memory into my stories.
This year, I've embraced more literal expressions of his character in some yet-unpublished works, but the tradition seeped into my science fiction universe, Space Cadets, long ago. When I needed a number for a space freighter in my opening sequence, I used Jerry's birthday. Freighter 601 has been Space Cadets canon since 2009. If you poke around too much, you might see that numeric combo popping up quite a bit in my work.
'Write what you know' doesn't have to be Hamlet. It just has to be.